Shares of Ashok Leyland fell on Friday after an initial increase, affected by concerns over commodity inflation, rising fuel prices, and uncertain truck demand, despite the company’s robust performance in the March quarter.
The stock initially rose by 1.2% to ₹165.70, compared to the previous close of ₹163.62, before reversing course and closing 5% lower at ₹155.44 on the NSE. Investors are assessing how higher steel prices and macroeconomic uncertainties will impact margins and commercial vehicle demand in FY27.
For the quarter ending March 31, 2026, Ashok Leyland reported an 11% year-on-year increase in consolidated net profit, reaching ₹1,381 crore. Management expressed cautious optimism for FY27, citing resilient drivers for commercial vehicle demand, such as fleet replacement and benefits tied to the Goods and Services Tax (GST), while also warning of global economic uncertainties and fluctuating commodity prices.
The company anticipates improvements in industry-level commercial vehicle performance in Q1 FY27 compared to the same period last year. However, it indicated that demand in light and intermediate commercial vehicle segments may moderate from the levels seen in Q4 FY26, while heavy-duty truck demand is expected to improve, aiding product mix.
Ashok Leyland cautioned that significant increases in commodity costs, particularly steel, could pressure margins in the near term. To address this, the company has enacted a price hike of 1-1.5% and is focusing on cost-control measures, though it remains uncertain if this price increase can be sustained throughout the quarter.
Capital expenditure for FY27 is projected between ₹750 crore and ₹1,000 crore. Investments in subsidiaries will be on a need basis, with Hinduja Leyland Finance, Hinduja Housing Finance, and OHM Mobility potentially requiring growth capital. Management reported that Switch Mobility India has become profitable and is in a strong financial position.
The defence segment is expected to maintain a growth trajectory of 20% over the next two to three years, backed by an executable order book exceeding ₹1,500 crore. Non-vehicle revenues are also expected to gain traction in Q1 FY27.
Brokerages have expressed varied opinions on the stock following the earnings announcement. Morgan Stanley maintained an equal-weight rating with a target price of ₹180, stating that Q4 results were generally in line with expectations, while flagging inflationary pressures that require monitoring. Jefferies, on the other hand, maintained a hold rating and reduced its target price from ₹190 to ₹160, citing uncertainty in truck demand and margin pressure due to rising fuel prices and inflation risks.
JPMorgan retained its neutral rating and raised the target price to ₹175, indicating that pricing discipline is likely to persist amidst volatile demand trends. Citi maintained a buy rating with a target price of ₹205, noting that Q4 results slightly exceeded estimates and that the long-term outlook remains positive despite some expected moderation in near-term demand.
Among domestic brokerages, Choice Institutional Equities upgraded the stock to a buy rating and revised its target price to ₹195 from ₹225, emphasizing long-term growth visibility driven by premium product launches and improving export volumes. Conversely, Motilal Oswal reiterated its buy rating with a target price of ₹188, commenting that geopolitical uncertainties might temporarily affect demand and margins but anticipated recovery in the second half of FY27. The brokerage forecasts Ashok Leyland will achieve a revenue growth rate of 10%, with EBITDA and profit after tax growing at 12% and 15%, respectively, over FY26-28.
Published on May 29, 2026.
